GlobeNewswire Inc | Aug 10, 2020 04:05PM EDT

August 10, 2020

SEATTLE, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Adaptive Biotechnologies Corporation (Adaptive Biotechnologies) (Nasdaq: ADPT), a commercial stage biotechnology company that aims to translate the genetics of the adaptive immune system into clinical products to diagnose and treat disease, today reported financial results for the quarter ended June 30, 2020.

The current coronavirus pandemic is highlighting the critical importance of a deeper understanding of the immune response to disease broadly, making Adaptives technology more relevant than ever, said Chad Robins, chief executive officer and co-founder of Adaptive Biotechnologies. In the past several months, we have demonstrated that we can read and translate the genetics of immune receptors in blood, including T-cell response at scale, which is enabling us to rapidly deliver novel, immune-driven products.

Recent Highlights

-- Revenue was $21.0 million for the quarter ended June 30, 2020, representing a 5% decrease from the second quarter in the prior year. -- Clinical sequencing volume increased 31% to 3,136 clinical tests delivered in the second quarter of 2020 compared to the second quarter 2019. -- Advanced our first immunoSEQ Dx clinical product in development for SARS-CoV-2 based on favorable results from a head-to-head study comparing Adaptives clinical T-cell based diagnostic test to two leading serology tests with additional publication forthcoming. -- Launched a new research product, immunoSEQ T-MAP COVID, to offer vaccine developers a tool to accurately and reproducibly measure the T-cell immune response to vaccines in development and track the persistence of that response over time. -- Received clearance from the U.S. Food and Drug Administration (FDA) for clonoSEQ Assay to detect and monitor minimal residual disease (MRD) in blood or bone marrow from patients with chronic lymphocytic leukemia (CLL). -- Initiated two clinical validation studies for immunoSEQ Dx: ImmuneSENSE Lyme for Lyme disease, and ImmuneRACE to collect blood samples from people who have been exposed, are actively fighting or have recently recovered from COVID-19. -- Strengthened balance sheet with the successful completion of underwritten public offering, raisingapproximately $271.7 millionin net proceeds.

Second Quarter 2020 Financial Results

Revenue was $21.0 million for the quarter ended June 30, 2020, representing a 5% decrease from the second quarter in the prior year. Sequencing revenue was $8.0 million for the quarter, representing a 33% decrease from the second quarter in the prior year. Development revenue increased to $13.0 million for the quarter, representing a 27% increase from the second quarter in the prior year.

Operating expenses were $57.9 million for the second quarter of 2020, compared to $38.2 million in the second quarter of the prior year, representing an increase of 52%.

Net loss was $33.5 million for the second quarter of 2020, compared to $15.7 million for the same period in 2019.

Adjusted EBITDA (non-GAAP) was a loss of $28.5 million for the second quarter of 2020, compared to a loss of $10.9 million for the second quarter of the prior year.

Cash, cash equivalents and marketable securities was $627.8 million as of June 30, 2020. Subsequent to the quarter, Adaptive Biotechnologies raised approximately $271.7 million in net proceeds, after deducting underwriting discounts and net offering expenses payable by us, from a follow-on offering, which closed in mid-July.

2020 Financial Guidance

Adaptive Biotechnologiesis not providing 2020 financial guidance due to the continued uncertainties from the impact of COVID-19.

Webcast and Conference Call Information

Adaptive Biotechnologies will host a conference call to discuss its second quarter financial results after market close on Monday, August 10, 2020 at 4:30 PM Eastern Time. The conference call can be accessed at http://investors.adaptivebiotech.com. The webcast will be archived and available for replay at least 90 days after the event.

About Adaptive Biotechnologies

Adaptive Biotechnologiesis a commercial-stage biotechnology company focused on harnessing the inherent biology of the adaptive immune system to transform the diagnosis and treatment of disease. We believe the adaptive immune system is natures most finely tuned diagnostic and therapeutic for most diseases, but the inability to decode it has prevented the medical community from fully leveraging its capabilities. Our proprietary immune medicine platform reveals and translates the massive genetics of the adaptive immune system with scale, precision and speed to develop products in life sciences research, clinical diagnostics and drug discovery. We have two commercial products and a robust clinical pipeline to diagnose, monitor and enable the treatment of diseases such as cancer, autoimmune conditions and infectious diseases. Our goal is to develop and commercialize immune-driven clinical products tailored to each individual patient.

Forward-Looking Statements

This press release contains forward-looking statements that are based on managements beliefs and assumptions and on information currently available to management. All statements contained in this release other than statements of historical fact are forward-looking statements, including statements regarding our ability to develop, commercialize and achieve market acceptance of our current and planned products and services, our research and development efforts and other matters regarding our business strategies, use of capital, results of operations and financial position and plans and objectives for future operations.

In some cases, you can identify forward-looking statements by the words may, will, could, would, should, expect, intend, plan, anticipate, believe, estimate, predict, project, potential, continue, ongoing or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. These risks, uncertainties and other factors are described under "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in the documents we file with the Securities and Exchange Commission from time to time. We caution you that forward-looking statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. As a result, the forward-looking statements may not prove to be accurate. The forward-looking statements in this press release represent our views as of the date hereof. We undertake no obligation to update any forward-looking statements for any reason, except as required by law.

Use of Non-GAAP Financial Measure

This press release includes references to Adjusted EBITDA, which is a non-GAAP financial measure that we define as net loss adjusted for interest and other income, net, income tax benefit (expense), depreciation and amortization and share-based compensation expenses. We have provided a reconciliation of net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA at the end of this press release.

Management uses Adjusted EBITDA to evaluate the financial performance of our business and the effectiveness of our business strategies. We present Adjusted EBITDA because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry and it facilitates comparisons on a consistent basis across reporting periods. Further, we believe it is helpful in highlighting trends in our operating results because it excludes items that are not indicative of our core operating performance.

Adjusted EBITDA has limitations as an analytical tool and you should not consider it in isolation, or as a substitute for analysis of our results as reported under GAAP. We may in the future incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. In particular, we expect to incur meaningful share-based compensation expense in the future. Other limitations include that Adjusted EBITDA does not reflect:

-- all expenditures or future requirements for capital expenditures or contractual commitments; -- changes in our working capital needs; -- income tax benefit (expense), which may be a necessary element of our costs and ability to operate; -- the costs of replacing the assets being depreciated and amortized, which will often have to be replaced in the future; -- the non-cash component of employee compensation expense; and -- the impact of earnings or charges resulting from matters we consider not to be reflective, on a recurring basis, of our ongoing operations.

In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

ADAPTIVE MEDIA Beth Keshishian 917-912-7195media@adaptivebiotech.com

ADAPTIVE INVESTORS Karina Calzadilla, Vice President, Investor Relations201-396-1687 Carrie Mendivil, Gilmartin Groupinvestors@adaptivebiotech.com

Adaptive BiotechnologiesCondensed Statements of Operations(in thousands, except share and per share amounts)

Three Months Ended June30, Six Months Ended June30, 2020 2019 2020 2019 (unaudited)Revenue Sequencing $ 7,985 $ 11,865 $ 17,454 $ 17,948 revenueDevelopment 13,003 10,273 24,444 16,856 revenue Total revenue 20,988 22,138 41,898 34,804 Operating expensesCost of revenue 4,912 5,734 10,255 10,722 Research and 25,992 16,527 49,927 29,010 developmentSales and 14,332 8,897 28,339 16,714 marketingGeneral and 12,238 6,662 24,059 13,666 administrativeAmortization ofintangible 423 423 847 842 assets Totaloperating 57,897 38,243 113,427 70,954 expensesLoss from (36,909 ) (16,105 ) (71,529 ) (36,150 )operationsInterest andother income, 1,893 446 4,787 2,105 netIncome tax 1,481 ? 1,804 ? benefitNet loss (33,535 ) (15,659 ) (64,938 ) (34,045 )Fair valueadjustment toSeries E-1 ? (710 ) ? (964 )convertiblepreferred stock optionsNet lossattributable to $ (33,535 ) $ (16,369 ) $ (64,938 ) $ (35,009 )commonshareholdersNet loss pershareattributable tocommon $ (0.26 ) $ (1.23 ) $ (0.51 ) $ (2.68 )shareholders, basic anddilutedWeighted-averageshares used incomputing netloss per share attributable to 127,383,582 13,279,324 126,720,986 13,074,692commonshareholders,basic and diluted

Adaptive BiotechnologiesCondensed Balance Sheets(in thousands, except share and per share amounts)

June30, December31, 2020 2019 (unaudited) Assets Current assets Cash and cash equivalents $ $ 96,576 365,440Short-term marketable securities (amortized cost of $203,765 and $479,791, 204,940 480,290 respectively)Accounts receivable, net 7,914 12,676 Inventory 10,536 9,069 Prepaid expenses and other current assets 10,691 14,079 Total current assets 599,521 612,690Long-term assets Property and equipment, net 26,833 60,355 Operating lease right-of-use assets 37,619 ? Long-term marketable securities (amortized cost of $56,405 and $105,263, 57,383 105,435 respectively)Restricted cash 2,138 2,138 Intangible assets, net 11,081 11,928 Goodwill 118,972 118,972Other assets 1,275 784 Total assets $ $ 854,822 912,302Liabilities and shareholders? equity Current liabilities Accounts payable $ 3,686 $ 4,453 Accrued liabilities 4,832 4,371 Accrued compensation and benefits 5,976 8,124 Current portion of deferred rent ? 371 Current operating lease liabilities 3,229 ? Current deferred revenue 75,699 60,994 Total current liabilities 93,422 78,313 Long-term liabilities Deferred rent liability, less current portion ? 6,918 Operating lease liabilities, less current portion 42,503 ? Financing obligation ? 36,607 Deferred revenue, less current portion 187,462 219,332Other long-term liabilities 1,496 93 Total liabilities 324,883 341,263Commitments and contingencies Shareholders? equity Preferred stock: $0.0001 par value, 10,000,000shares authorized at June 30, 2020 and December 31, 2019; no shares ? ? issued and outstanding at June 30, 2020 and December 31,2019Common stock: $0.0001 par value, 340,000,000shares authorized at June 30, 2020 and December 31, 2019; 128,233,842 and 12 12 125,238,142 shares issued and outstanding at June 30, 2020 and December 31,2019, respectivelyAdditional paid-in capital 958,097 935,834Accumulated other comprehensive gain 2,153 671 Accumulated deficit ) ) (430,323 (365,478 Total shareholders? equity 529,939 571,039 Total liabilities and shareholders? equity $ $ 854,822 912,302

Adjusted EBITDA

The following table sets forth a reconciliation between our Adjusted EBITDA and our net loss, the most directly comparable GAAP financial measure, for each of the periods presented (in thousands):

Three Months Ended Six Months Ended June30, June30, 2020 2019 2020 2019 (unaudited)Net loss $ ) $ ) $ ) $ ) (33,535 (15,659 (64,938 (34,045Interest and other income, ) (446 ) ) )net (1,893 (4,787 (2,105Income tax benefit ) ? ) ? (1,481 (1,804Depreciation and 1,998 1,870 3,976 3,653 amortization expenseShare-based compensation 6,373 3,332 6,378 expense 11,048Adjusted EBITDA $ ) $ ) $ ) $ ) (28,538 (10,903 (56,505 (26,119